Premium exports equal premium lifestyles

Premium Exports blog

Posted on 8 March 2017 by Jim Wilkes

In the global marketplace, real sustainable export success comes from being the best in the world at what you do. Make no mistake, trying to break into intensely competitive global markets with second rate products doesn’t cut the mustard.
New Zealand has proven it’s right up there in some fields. For example, the country’s farmers have been brilliantly successful at dairying. Unfortunately, our dairy industry is also heavily focused on exporting milk powder, which is a commodity and vulnerable to volatile swings in demand and supply. This puts farmers, banks and the wider New Zealand economy at risk.

Another challenge with being so successful at dairying is the industry has reached its scale limits because of environmental constraints. The risk to rivers, flora and fauna is now too great to scale further. From this point, we must look to develop and export high-value products packed with knowledge.

To be fair, New Zealand’s top 100 technology companies already export around $5 billion per annum, which is a great start. But…we need to do better. To match Australia’s current per capita GDP, New Zealand needs ten times the current output of environmentally benign businesses. That’s a big stretch with our current attitude to producing premium, high-value export products.

So, what do we do? Sir Paul Callaghan famously suggested, “What we excel in are the niches, the little pieces of the world of technology where the big players can’t be bothered, but which, because of the 500 times factor, can be huge for us.” And why is this per capita GDP thing such a big deal?

Pretty simple really. New Zealanders enjoy some of the best lifestyles in the world and I’m pretty sure most of us would like this to continue. The landscape is beautiful, the people are warm and welcoming, and the future is full of potential. There’s a reason it’s called Godzone. The challenge, of course, is making sure it stays this way and even though New Zealand is one of the world’s premier agricultural powerhouses, being good at ‘Ag’ just isn’t enough.
In the engineering and technology space Onguard Seismic Systems, a Christchurch company backed by innovative engineering group Structex has shown that investing in world-class thinking can be converted into world-class exporting. The development of Onguard Seismic Systems supports Sir Paul Callaghan’s statement above.

In many ways, Onguard should have been unlikely, even improbable. This incredible engineering innovation, which now protects hundreds of wine tanks in New Zealand and California, originated from a boutique engineering firm operating in one of the smallest wine producing countries in the world. Sure, New Zealand is highly seismic, so there is an obvious problem to be solved, but so are many other wine growing regions in the world – especially California, which is becoming the global exporting platform for Onguard.

Wineries, tank manufacturers and consulting engineers in the wine-growing regions of California are embracing and widely specifying the new technology. This is the sort of ‘smarts’ New Zealand needs. This is how you increase per capita GDP and this is how you retain a premium lifestyle and a world-class standard of living. Equally relevant, it is not one of the huge multi-nationals resplendent with unlimited R&D budgets that has managed to see the opportunity. The engineers at Onguard did. By doing so they have provided some clues about what is required to innovate a premium class technology, and successfully export it to the world. I might add, they didn’t get much help. The entire commercialization program was managed and funded in-house.

The fact is, though, Onguard is a rare standout. Unfortunately, New Zealand R&D still ranks in the bottom quarter of the OECD and far below leading small countries. Business investment in R&D (BERD) is 0.54 percent of GDP, a third of the OECD average of 1.62 percent, which places New Zealand in the bottom quarter of the OECD. Small advanced economies like Denmark, Finland and Israel typically invest more than 3 percent in R&D.

Onguard is one company bucking the trend. They have proven it can be done…so come on innovators, take Onguard’s lead and let’s have plenty more. Our premium lifestyles depend on it.

Ends.